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Patriot Coal Files Motion to Sell Operating Assets to Blackhawk Mining

June 03, 2015, 07:49 AM
Filed Under: Bankruptcy

Patriot Coal Corporation, a producer and marketer of coal in the eastern United States, has filed with the Bankruptcy Court a letter of intent for a proposed sale of a substantial majority of its operating assets to Blackhawk Mining, LLC, as well as a motion outlining bidding procedures. The contemplated transaction would be consummated pursuant to a chapter 11 plan and is subject to documentation of a definitive asset purchase agreement, bankruptcy court approval of the sale, confirmation of a chapter 11 plan, and other customary conditions. Patriot's mining operations and customer shipments will continue in the ordinary course during the sale process.

Under the terms of the letter of intent, Blackhawk would issue to Patriot's secured lenders new debt securities totaling approximately $643 million plus Class B Units providing them an ownership stake in Blackhawk.  In addition, Blackhawk would assume or replace surety bonds supporting reclamation and related liabilities associated with the purchased assets.

Bob Bennett, President and Chief Executive Officer of Patriot, said, "We feel strongly that the proposed transaction with Blackhawk is in the best interest of Patriot, and its employees and stakeholders.  Blackhawk shares our dedication to operational and environmental excellence, and this transaction creates a viable path forward in this challenging market environment, enabling our mining operations to continue serving customers and preserving jobs in the communities in which they operate. As always, we remain committed to operating safely and serving our customers throughout this sale process."

Patriot is continuing to negotiate with Blackhawk on the terms of a formal asset purchase agreement.  Certain Patriot assets not included in the proposed transaction with Blackhawk will be subject to a separate sale process outlined in the bidding procedures motion. 

Patriot Coal Corporation is a producer and marketer of coal in the eastern United States, with 8 active mining complexes in Northern and Central Appalachia. Patriot mines, processes and sells bituminous metallurgical, thermal, and stoker coal to domestic and international electricity generators, metallurgical coal customers and industrial users, and controls approximately 1.4 billion tons of proven and probable coal reserves.

Blackhawk Mining, LLC is a privately owned coal producer operating in Central Appalachia and the Illinois Basin, with 5 active mining complexes. Blackhawk mines, processes and sells bituminous thermal, PCI, stoker and industrial grade metallurgical coal to domestic and international electric utilities, steel producers and industrial customers.

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